Volcker hits back as critics attack controversial rule
BANKS and trade associations have filed hundreds of letters outlining their objections to the Volcker rule, with UK groups adding their concerns on the rule’s international impact.
The aim of the rule, which comes into force in July, is to stop US banks carrying out proprietary trades if they also own private equity or hedge funds, by banning them from investing in so-called covered funds.
But the Investment Management Association (IMA) is worried that the rule’s definition of a covered fund could mean it will hit UK investment.
“This would unreasonably limit investment into non-US funds,” said IMA director Julie Patterson.
Paul Volcker, who proposed the restriction back in 2009, jumped to its defence in an open letter posted on the US regulator’s website yesterday. He claimed prop trading was for the “benefit of limited groups of highly-paid employees”, and should never be given government support.